Allergan Is Bullish on Biotech

Ever since Allergan (NYSE: AGN) completed the $40.5 billion sale of its generics business to Teva Pharmaceutical Industries (NYSE: TEVA) on August 2, the pharma giant is targeting biotech companies with a vengeance.

In September alone (and we’re only talking about three weeks at this point), the company has announced four deals, totalling $1.28 billion. Year-to-date, Allergan has announced nine transactions for a total of $1.67 billion, more than Pfizer’s (NYSE: PFE) seven deals but far behind the $19.8 billion Pfizer committed to those transactions. (Pfizer’s biggest deal this year, the $13.5 billion acquisition of Medivation (NASDAQ: MDVN), was announced in August.)

Allergan’s biggest buy in September (so far), at $639 milllion, is Vitae Pharmaceuticals, a privately held clinical-stage company developing product candidates for the treatment of psoriasis, other autoimmune disorders and atopic dermatitis. Allergan agreed to an all-cash offer of $21.00 per share.

This acquisition strengthens Allergan’s medical dermatology pipeline with VTP-43742, a Phase 2 first-in-class, orally active RORγt inhibitor for the potential treatment of psoriasis and other autoimmune disorders. It also adds VTP-38453, a topical LXRβ selective agonist for the potential treatment of atopic dermatitis, currently in a Phase 2a proof-of-concept trial.

The most-talked about of Allergan’s recent deals is the acquisition of Tobira Therapeutics (NASDAQ: TBRA), a clinical-stage biopharma focused on the development and commercialization of therapeutics and treatments for non-alcoholic steatohepatitis (NASH) and other liver diseases.

Allergan is paying $28.35 per TBRA share in cash, and up to $49.84 per share in Contingent Value Rights that may be payable based on the successful completion of certain milestones, for a total consideration of up to $1.695 billion. Just the upfront payment alone, $533.5 million, translates to 456x revenue.

The acquisition adds Cenicriviroc and Evogliptin, two differentiated, complementary development programs for the treatment of the multi-factorial elements of NASH, to Allergan’s gastroenterology R&D pipeline.

A day after the Tobira deal was announced, Allergan added another NASH-focused company, privately held Akarna Therapeutics Ltd., which develops novel small molecule therapeutics that targeted inflammatory and fibrotic diseases. Its lead product candidate, AKN-083, is in pre-clinical, IND-enabling toxicology and safety pharmacology studies. The price was a modest $50 million in cash.

Early in September, Allergan added RetroSense Therapeutics, LLC, a clinical-stage biotech working on gene therapy approaches to restore vision in blind patients. Its lead development program is RST-001, a novel gene therapy for the potential treatment of retinitis pigmentosa.

The $60 million, all-cash transaction gives Allergan global rights to RST-001, which received Orphan Drug Designation in 2014 from the FDA for the treatment of retinitis pigmentosa. In August 2015, RetroSense’s IND application for RST-001 received clearance from the FDA. In March 2016, RetroSense initiated a Phase 1-2a clinical trial to evaluate the safety of RST-001 in patients being dosed, and in August 2016, the low dose cohort of patients had been safely dosed.